Finance Minister Chrystia Freeland told reporters that Tuesday’s economic statement wasn’t a budget, or a mini-budget, but an old fashioned state-of-the-economy document.BLAIR GABLE/Reuters
Revenues are up. Take-up on emergency COVID-19 programs is down. The massive deficits are smaller than expected. There was room to budget tens of billions of dollars on additional COVID-19 measures, to settle Indigenous child-welfare lawsuits, and for rebuilding from B.C. floods.
But what happened to all that election stuff?
The next thing to come on the budget front is the $78-billion in spending the Liberals promised during the election campaign. You know, the campaign held just a few months ago, when Prime Minister Justin Trudeau told Canadians there were urgent decisions to make, and urgent things to get on with.
That spending wasn’t in the economic statement. The $6-billion in special health care funds the Liberals promised to spend in the fiscal year ending in April to eliminate backlogs in surgeries was not mentioned. The bank tax that the Liberals promised would squeeze more out of finance-industry fat cats starting Jan. 1 – well, that apparently isn’t so urgent after all. The rest of the agenda was absent.
Finance Minister Chrystia Freeland told reporters that the reason is that Tuesday’s economic statement wasn’t a budget, or a mini-budget, but an old fashioned state-of-the-economy document – plus spending on items that are “urgent and necessary right now.”
Don’t expect Liberals to change course on economic policy
Now, it is usually fine for government to restrict their budgeting to once a year. But aside from the fact that Tuesday’s not-a-mini-budget actually budgeted $71.2-billion in new spending, it is worth noting Mr. Trudeau’s no-time-to-lose Liberals have been slow to get cracking on their urgent third-mandate agenda.
It took Mr. Trudeau more than a month to name a new cabinet and more than two to recall Parliament, and his ministers have yet to receive their mandate letters. That’s inside-Ottawa stuff, but Tuesday’s economic statement added to the evidence of improvisational stalling.
Ms. Freeland told reporters the Liberals are still committed to their election promises, and said that the party’s election platform was fully costed. And it was! The platform included amounts allocated for each promised measure to each of five fiscal years, in a way that suggested they could be transcribed into, well, a budget. Or a mini-budget. You’d think it would be easy to get started.
So what happened? There was something of a windfall for the government’s figures, because inflation and higher oil prices pushed up revenues, and lower take-up on COVID-19 benefits pushed down some costs.
That shaved $126.9-billion off the deficit over six years. But then the Liberals added $67.4-billion in new spending over the same six years. Even with that, the deficit projections look a lot rosier, and four or five years down the road, downright healthy.
And those figures helped Ms. Freeland make the point she wanted to make: The economy is bouncing back nicely from the pandemic. And the public finances are okay.
If she had added in all the costs of those Liberal election promises, it would have brought the total of new spending to more than $140-billion, and made the deficits look worse, not better. Why not take a beat to say things are good?
The urgent spending that was outlined on Tuesday was the kind of thing the Liberals want to announce now. Motherhood expenses for COVID-19, especially vaccines and tests. Or for B.C. floods. The billions to settle Indigenous child-welfare lawsuits and improve the system is both the price of neglect and, for the Liberals, a welcome end to a politically damaging story.
But then those election spending promises are still out there, and Ms. Freeland said they are still coming. And she also said there will be a plan to help the economy emerge from the pandemic based on promoting growth and competitiveness.
“This is not the master plan for the Canadian economy moving forward,” she said. “That will be in the budget.”
That sure sounds like a lot of stuff that is coming one day next spring, TBD.
Last April’s budget had a $101-billion recovery plan for three years. Tuesday’s statement had $71-billion in urgent spending over six years. Next April’s budget will supposedly accommodate $78-billion in spending promises over five years, balanced with about $25-billion in new revenues from a bank tax, a separate Canada Recovery Dividend levied on financial institutions, a house-flipping tax and more. And a master plan.
It seems like they should have made a start on all that. But the immediate spending is what the Liberals were ready for. For the urgent agenda of their third mandate, wait until next year.
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